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 Introduction:

As Nifty scales new heights, touching 20,000 for the first time, it's a fitting moment to rewind to the early days of my career in the stock market back in 2005 when it all started for me. At that time, Sensex had just crossed the 8,000 mark, and Nifty was around 2,500.  

My first boss's words, "Beta dekh le, yeh history hai, ek zindagi mein ek baar hi dekhne ko milta hai" (Son, look at this, its history, a once-in-a-lifetime moment), left a lasting impression.

 It was a time when the stock market was buzzing, especially in the infrastructure sector, where it seemed like every investment doubled within months.

 

Chapter 1: Early Days (2005-2008) - The Thrill of Trading

In the mid-2000s, I was new to the finance world and couldn't resist the excitement surrounding the booming stock market. Sensex was on a rocket ride, and it felt like the party would never end. I joined the trading frenzy but also heeded advice to set aside some funds for mutual fund investments.

 

Chapter 2: Embracing SIP and Mutual Funds

During this period, I discovered Systematic Investment Plans (SIPs), which offered a simple way to invest regularly in mutual funds. I chose four funds on the basis of so-called best fund and NFO:

1. HDFC Top 100 Fund

2. ICICI Pru Value Discovery Fund

3. ICICI Pru Infrastructure Fund

4. Nippon India Growth Fund

 

This decision to diversify my investments turned out to be a game-changer.

 

Chapter 3: Hindsight and Wealth Creation Scenarios

Fast forward to today, and I can't help but wonder what if I had remained invested with unwavering patience and without being swayed by the market's noise. I've considered three scenarios to understand the potential wealth that could have been created:

 

1. Investing in the Top 25 Stocks (Total 25 Lakhs): If I had invested 100,000 in each of the top 25 stocks of 2005 and held onto them, today, the value would be approximately 2.68 Crores, growing at an impressive 14.10% CAGR, nearly 10.7 times the initial investment.

2. Investing in Index Funds (Total 25 Lakhs): Alternatively, if I had invested the entire 25 Lakhs in either Nifty, Sensex, or Bank Nifty, the value would range between 2 to 2.60 Crores, growing at a commendable 12.50% CAGR, roughly 8 to 10 times the initial investment.

 

 

3. Investing in All Four Mutual Funds (Total 25 Lakhs): By investing 625,000 in each of the four mutual funds I started with, the value today would be approximately 3.70 Crores, achieving a remarkable 16% CAGR, nearly 15 times the initial investment.

 

 

Please note that these returns are measured solely in terms of CAGR and multiplier and do not consider dividends.

 

Chapter 4: The Power of Patience and Optimism

This journey of wealth creation emphasizes the significance of patience and optimism. Through market ups and downs, geopolitical issues, government changes, tax reforms, and even a global lockdown, Nifty has remained resilient and on its path.

 

Chapter 5: The Future of Nifty - Can It Touch 100,000?

Now, the question on everyone's mind is what lies ahead. Can Nifty reach the coveted 100,000 mark? When we look at the numbers:

 

- If Nifty maintains its historical growth rate of 12% CAGR, it could hit 100,000 by 2037, just 14 years from now.

- Even with a more conservative 10% or 8% CAGR, Nifty could reach 100,000 between 2040 and 2044.

 

 

 

The choice now lies with you. Do you have the patience to stay invested, or do you believe it's time to exit?

 

Chapter 6: Understanding the Power of Compounding

In making these decisions, it's crucial to understand the power of compounding. The formula is simple, as shown below, but its implications are profound:

 

Trail Compounding Formula: 8^th Wonder of the world- “He who understands it- Earn it. He who doesn’t – Pays for it”

The human brain is naturally wired to grasp linear processes, but exponential growth can be challenging to comprehend. Yet, this journey from 2005 to Nifty at 20,000 teaches us the importance of seeing the bigger picture, like gazing through a Telescope rather than scrutinizing details through a Microscope.

 

Conclusion:

In conclusion, the story of Nifty's journey from 2005 to 20,000 reveals valuable lessons in patience, optimism, and wealth creation. It reminds us that while “Wealth creation in the stock market is Simple, it's not always easy”. It requires faith in the process, the discipline to remain patient through market turbulence, and a profound belief in the power of time and compounding.

 

As we contemplate the future of Nifty, let's remember that history has shown us the rewards of staying the course. Your investment decisions are yours to make, and whichever path you choose, do it without regrets.

 

Disclaimer: This article does not constitute any recommendation to buy or sell stocks, indexes, or mutual funds. It is solely intended to illustrate the potential benefits of long-term equity investments. Please note that Nifty's future returns will not follow a linear path, as it will experience its ups and downs. This analysis serves as a reference for understanding the power of compounding. Always conduct thorough research and consult with financial experts before making investment decisions.